What will gender pay gap reporting really achieve?

What will gender pay gap reporting really achieve?

Early reports on gender pay gap reporting for 2018 look somewhat disappointing.

According to an analysis by the BBC of the initial reports published (about 10% of the expected total), four in ten private companies are reporting wider gaps than last year. However, of the 1,100+ companies that have reported so far, there is a slight improvement in the median pay gap reported from 9.7% to 8.4%.

With the vast majority of companies still to report, it is too soon to be drawing too many conclusions, but this is an area to watch from a corporate governance perspective.

The UK was one of the first countries to introduce gender pay gap reporting, with the government claiming it would help break the glass ceiling and create a more modern workforce. The move was heralded as a sign that the government really was serious about taking steps to address gender inequalities in the workplace.

Yet what can such reporting really achieve?

On the one hand, reporting does mean that organisations are required at least to consider the figures, even if only once a year. It also brings the issue to the fore, creating a public platform for the debate.

What it lacks however, is any real driver for change. If companies are simply required to report on the numbers, without any obligation to explain or demonstrate a plan for improvement, the status quo is likely to be maintained: publish and be dammed.

A yearly snapshot can also be mis-leading. In 2018, Kwik Fit reported a negative gender pay gap (where women are paid more) of -15.2%, which would have seemed ground breaking in an industry historically appealing to men. This year, however, the gap has shifted in favour of men to +14%.

It was down to a spokeswoman for the company to explain that although Kwik Fit is trying to recruit more women, last year’s figures were due to the fact that most of their female employees were in the upper quartile pay bracket. Over the last 12 months a number of these senior employees have left which now skews the figures in favour of men.

In many organisations, a large gender pay gap in favour of men often indicates a tendency to employ women in more junior roles.

If the workplace is going to become a more equal place for women, we should mirror the ‘comply or explain’ approach taken by the Financial Reporting Council. As such, the Equality and Human Rights Commission is right to argue that in addition to the numbers, there should be a requirement to show what is being done to improve.

If there was a plan to recruit more women at entry level and promote them through the ranks, that would be a positive step towards changing workplace culture and while the gender gap may appear to favour men initially, over time, if successful, the organisation could show real improvement.

The UK currently has one of the widest overall gender pay gaps in Europe. We need to understand not just what women are paid in relation to men, but also the roles they take on, how the path to promotion works, the impact of families on career progression and any barriers to attaining seniority that may exist. Setting targets and requiring organisations to demonstrate the actions they are taking to meet them would really help to break the glass ceiling and create a modern workplace.

 

Posted February 2019